Solve Weighted Average Cost of Capital for BD Corporation

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Reference no: EM132518174

Debt: 187,500 individual bonds with a 7 percent coupon outstanding, with 15 years to maturity and sells for $800. These bonds compound semiannually.

Common Stock: 8,000,000 shares of common stock selling for $37.50 per share. The stock just paid a dividend today of $2.00. The dividend is expected to grow at a constant rate of 10 percent indefinitely.

Preferred Stock: 800,000 shares of $4.00 stated dividend preferred stock selling at 62.50 per share.

Market: The tax rate is 34 percent.

Question 1: Calculate the Weighted Average Cost of Capital (WACC) for BD Corporation.

Reference no: EM132518174

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